Merck sees market for novel therapies, to focus on its oncology pipeline

MUMBAI: Merck is betting on India's growing pharmaceutical space and steady state spending on healthcare to expand its business, even as the German life sciences and technology company's seven-year-old joint venture with Dr Reddy's Laboratories to develop biosimilar drugs comes to an end.

The 350-year-old company is known to be a global leader in the manufacturing of biosciences products. It is betting big on its oncology pipeline, in the field of immunotherapy that has come to define new-age cancer treatment.

"We went into biosimilars during a period of time that was in 2011-12, when we were not sure how our research-based pipeline was developing. So I said before biosimilars was plan B for us," Stefan Oschmann, the chief executive of Merck KGaA, told ET in an interview. "Now, our R&D pipeline has developed so nicely and because we have to prioritise and we cannot afford to finance everything, we decided to sell the (biosimilar) business."

But Oschmann said the business was progressing very well. "So, it has reached most of the milestones that we had defined," he added.

Merck KGaA is different from American drug maker Merck & Co, which is known as MSD outside the US and Canada. In 2012, the company and Dr Reddy's announced that they would co-develop a portfolio of biosimilar compounds in oncology.

The partnership also covered manufacturing and commercialisation of the compounds.

Merck, in March this year, said it would sell the biosimilar business to Fresenius Kabi. Merck is now fully focussed on expanding the indication for its novel drug Avelumab, which it is co-developing with US drug maker Pfizer.The immunotherapy drug received US regulatory approval this year for the treatment of a rare form of skin cancer. However, the company is working on 15 different indications where this drug could be used.

Immunotherapy drugs target specific check points to boost the immune system's ability to fight the cancer cells. The therapy through trials has shown to significantly reduce tumours in certain cancer patients. The other drugs in this space are Ketruda by MSD and Opdivo by Bristol-Myers Squibb.

"We got an approval in the US for a small indication of skin cancer. We also got approval for a certain form of bladder cancer. We have a huge programme with our partner Pfizer; we have 15 pivotal trials and we have thousands of patients in clinical research," the CEO said. "It is fascinating to see that we are now in a position in cancer research where many people believe that there is a chance to actually cure a certain number of patients through immunotherapy approaches..." Oschmann said.

Though science is unable to do that for all patients, there is a requirement of stratification, or classification -which patients to be treated and under what condition or intervention. "But all in all, it is a mind-boggling progress that the industry is making," he said. On the timeline for approval of these drugs, Oschmann said he expects a "steady flow of news of milestones". The company has yet to decide on when it could launch the drug in India. It has yet to file for approval with drug regulators in India. Considering the high price tag that novel therapies come with, Merck is still evaluating its options here.

Oschmann said the company's experience in marketing targeted therapy in India has so far been good, but considering access is such an issue it has to come up with innovative approaches towards pricing and other schemes.

"We need to ensure specific access schemes for those who can't afford it but also are unable to access it. I tend to be optimistic about India market: the economy is growing fast, you have consistent 7% economic growth, you see that the government is waking up to the fact that the government has to spend more in healthcare," he said."(But) India is still investing 1% in healthcare which is so low in a global context. So, going forward I believe that India would be an attractive market for novel therapies."

The India business contributes around Rs 600 crore to the company, primarily driven by its fertility treatment drugs. This is paltry compared to its China business, where the company is five times that in India.